Agefi Luxembourg - juillet août 2026

Juillet / Août 2026 7 AGEFI Luxembourg Économie By Antonio MERINO — Counsel, VAT lead, Baker McKenzie Luxembourg O n 17 June 2026, the General Court of the European Union (“GCEU”) ruled that the management, for consideration, of credit by the original lender after that lender has sold the credit is not exempt from value added tax (“VAT”). The decision in Veronsaajien oikeu­ denvalvontayksikkö (1) should be par­ ticularly relevant for a jurisdiction such as Luxembourg, where fi­ nancial transactions are at the heart of the domestic economy and where a new bill (2) has recently been introduced to make the securiti­ sation framework more attractive. Luxembourg is indeed a leading hub for structur­ ing international debt, fund financing and corpo­ rate credit transactions. From a commercial perspective, retaining loan servicing may be effi­ cient because the originating bank keeps the op­ erational capacity to administer the loans. For clarity, and to better understand the practical implications of this judgment from a VAT stand­ point, it should be noted that, under the Luxem­ bourg VAT Law (3) , credit management services supplied by the party that granted the credit ben­ efit from an exemption, whereas the same ser­ vices are taxable at the intermediate rate, currently 14%, if supplied by a party other than the person that granted the credit. Facts In the case reviewed by the GCEU, a Finnish com­ pany (“ seller ”) belonging to a banking group granted housing loans to customers in Finland. After the loans were drawn down, a substantial proportion of them was sold to a wholly owned subsidiary (“ purchaser ”). All rights and obligations attached to the loans were transferred, and many of those loans were then used as collateral for bonds issued by the pur­ chaser as part of a securitisation arrangement. Although the purchaser became the holder of the loans, the seller continued to manage them, han­ dling the loan relationship and related security, and acting as the purchaser’s representative visàvis the borrowers. The seller received marketbased remuneration from the purchaser for those man­ agement services. The FinnishCentral Tax Board held that both the sale of the loans and the subsequent manage­ ment services performed by the seller were ex­ empt from VAT, except for debt collection. The FinnishTaxRecipients’Legal ServicesUnit chal­ lenged that ruling, arguing that the VAT exemp­ tion for creditmanagement applies onlywhere the same taxable person is both the lender and the credit manager. Accordingly, once the seller had sold the loans, it could no longer rely on that exemp­ tion for the services it supplied to the purchaser. The Finnish Supreme Administra­ tive Court referred a request for a preliminary ruling to the CJEU, askingwhether the seller’s postsale management of the loans could be exempt underArticle 135(1)(b), (c) or (d) of the VATDirec­ tive (4) : respectively, asmanagement of credit by the person granting it, as a transaction concerning credit guarantees or other security formoney, or as a transaction concerning payments or debts. Reasoning of the GCEU The GCEU fully agreed with the conclusions set out inAdvocate General Brkan’s Opinion. It con­ sidered that the wording of the condition “by the person granting the credit” is not fully conclu­ sive across the different language versions: some point towards the original lender, while others may be read as referring to the current lender. That said, the purpose of the exemption — avoiding an increase in the cost of credit and the difficulties connected with determining the tax­ able basis — is not to favour the outsourcing of credit management to a third party. The GCEU therefore placed particular weight on the structure and principles of the VAT system. In its view, the exemption for credit management should be limited to management carried out by the current lender as part of the credit relation­ ship. That interpretation preserves fiscal neutral­ ity, because outsourcing credit management to the original lender should not receive more favourable VAT treatment than outsourcing it to any other thirdparty service provider. It also prevents the exemption from being circum­ vented through artificial structures. It should also be recalled that exemptions must be interpreted strictly, since they constitute ex­ ceptions to the general principle that all services supplied for consideration by a taxable person are subject to VAT. The risk that those costs may affect the borrower depends on commercial de­ cisions or specific credit terms. On the second question, the GCEU rejected the argument that the services could be exempt as dealings in credit guarantees or other security for money. Since the specific rule governing credit management is in a different article of the VAT Directive, allowing the same services to fall under the exemption for guarantees or security would undermine the deliberate limits of the creditman­ agement exemption. Similarly, the GCEU considered that the VAT ex­ emption applicable to transactions concerning debts should not apply to credit management. The management services supplied by the seller did not consist in a transfer of ownership of funds, nor did they have the effect of fulfilling the specific and essential functions of such a transfer. Interestingly, the GCEU did not consider whether the credit management services could be treated as ancillary to the sale of the loans, whereas Advocate General Brkan considered that approach untenable. According to her, credit management services should not be regarded as closely linked to the sale of loans and therefore cannot be ancillary, because they constitute an end in themselves for customers rather than a means of better enjoying the acquisition of the loans. In principle, the buyer could appoint an­ other provider to administer the loans without affecting the loan transfer itself. A brief reference to the VAT treatment applicable to the transfer of loans and the analogy with the Swiss Re case In her Opinion delivered four months ago, Advo­ cate General Brkan expressed doubts about the VATexempt treatment applied by the Finnish tax authorities, in an advance ruling, to the sale of credit. She noted that, in the Swiss Re case (5) , the CJEUheld that the sale of reinsurance contracts did not fall within the scope of the exemptions for fi­ nancial services. In essence, the transfer of a port­ folio of reinsurance contracts could not be exempted as a combination of dealings and a transaction concerningdebts. Thus, by analogy, the sale of credit should not be exempt fromVAT. TheGCEUdidnot refer in the judgment to this con­ troversial aspect, possibly because it was not in­ cluded in any of the three questions raised by the Finnish Supreme Administrative Court. Clarifica­ tion of the VAT treatment applicable to the sale of loans would have been very welcome. For clarity, under the Luxembourg VAT Law or the French VAT legislation (6) there is no exemption dealing ex­ pressly with the transfer of loans, and neither is there one inArticle 135 of theVATDirective, which sets out the exemptions applicable to financial transactions. By contrast, the Spanish VAT Law (7) specifically exempts the transfer of loans or credits. Conclusion The judgment in Veronsaajien oikeudenvalvontayk­ sikkö should be relevant for financial institutions using securitisation or similar refinancing struc­ tures. However, it isworth noting that, inmany se­ curitisation structures, the originator merely assigns the receivables while retaining the associ­ ated rights and obligations. The conclusions to be drawn may therefore differ from those applicable to the case at hand. In practice, loan servicing performed by Luxem­ bourg originators after the loan portfolio has been transferred to a purchaser established in Luxem­ bourg should trigger VAT at 14%, even where the originator remains the natural administrator of the borrower relationship. This could create irrecover­ able VAT costs for entities carrying out activities that do not give rise to input VAT recovery, and may need to be factored into the pricing and struc­ turing of securitisation transactions. It may be true that keeping the original lender as loan servicer after purchasing a loan portfolio en­ sures operational continuity and minimises tran­ sition risk. This is also very common in sales of nonperforming loans or large corporate loanport­ folios. It allows the purchaser to maintain existing customer relationships and avoid the logistical complexities of transferring large volumes of data. However, a significant VAT cost may arise for the purchaser if it does not have a full input VAT de­ duction right or cannot allocate the VAT borne or selfassessed under the reverse chargemechanism to an activity giving rise to input VAT recovery. In light of the outcome in Veronsaajien oikeuden­ valvontayksikkö , the agreements governing the full transfer of all rights and obligations should be re­ viewed and, where necessary, amended to reflect the risk that loan administration or servicing ser­ vices performed by the originator following the transfer of the receivables may constitute a taxable supply forVATpurposes, rather than fallingwithin the scope of the financial services exemption. 1) Veronsaajien oikeudenvalvontayksikkö v. A Oy , C184/25, EU:T:2026:399) 2) Bill of law8761 amending the lawof 22March 2004 on secu­ ritisation 3) Lawdated 12 February 1979 regardingValueAdded Tax (as amended) 4) Council Directive 2006/112/EC of 28 November 2006 on the common systemof valueadded tax 5) SwissReGermanyHoldingGmbHvFinanzamtMünchenfürKör­ perschaften, C242/08, EU:C:2009:647 6) General Tax Code 7) LawN° 37/1992 of 28 December 1992 approving VAT GCEU decision regarding the VAT exemption of credit management: Another hit for the financial sector? T he PwC Business Barometer rose to 15 in July from 17, indi­ cating a modest improve­ ment in business sentiment, although confidence re­ mains subdued. Luxembourg’s infla­ tionary pressures appear to be easing. According to STATEC, headline inflation is expected to average 2.2% in 2026, down from the 3.1% recorded inMay when energy prices surged. To further cushionhouse­ holds and businesses, the government introduced the “Resilienzpak 2026” under the Tripartite Agreement, with measures expected to limit energy price increases to2.3%in2026, comparedwith an estimated6.6%without intervention. Beyondtheneartermoutlook,theGrand Duchy’s competitiveness has strength­ ened, climbing to 14th place in the IMD World Competitiveness Ranking, driven by a marked improvement in economic performance. Nevertheless, longterm challengescontinuetobuild.TheIMFpro­ jectspublicdebttoincreasefrom26.5%of GDP in 2025 to 39.2% in 2031, while not­ ingthatLuxembourg’sstrongfundamen­ tals continue to cushion the economy againstexternalshocks.However,growth remains subduedanduneven, accompa­ niedbyasofteninglabourmarketandris­ ing uncertainty. It also noted that the GrandDuchy’seconomyhasyettoregain its past dynamism, with growth lagging its peers despite strong fundamentals, reinforcing the need to strengthen pro­ ductivity andprivatesectorledgrowth. The broader Eurozone economy is showingtentativesignsofimprovement, although the recovery remains uneven and vulnerable to external shocks. The CompositePMI edgedup to49.5 in June, bringing thebloc closer toexpansion ter­ ritoryafterseveralmonthsofcontraction. Annual inflation eased to 2.8%, below economists’ expectations of 3.0%, al­ though energy remained the principal driver, rising by 8.7% YoY. Against this backdrop,theECBraiseditsthreekeyin­ terest rates by 25bps, becoming the first G7 central bank to tightenpol­ icy in response to higher en­ ergy prices triggered by the MiddleEastconflict.Financial markets also reflected height­ ened inflation concerns, with Germany’s twoyear government bond yieldrisingabove 2.6% as of early Julyas investors repriced infla­ tion and mon­ etary policy risks following renewed US­ Iran tensions. While recent data suggest that downside pressure may be easing, the European Stability Mechanism (ESM) warned that a renewed escalation in the Middle East, coupledwith a sharp selloff inUS finan­ cial markets, could tip the euro area into recession anddrive inflation close to 5%. Globally, fears of persistent inflation con­ tinued to shape investor sentiment. The Fed and BoE kept interest rates unchanged, while BoJ raised its bench­ mark interest rate by 25bps to 1%, its highest level in three decades, reflecting policymakers’ continued cautious over the inflation outlook. Although Brent crude oil remains well below the peaks aboveUSD120 reached earlier in the conflict, its renewed climb towards the USD 80 per barrel mark fol­ lowing US strikes on Iran revived con­ cerns that disinflation process could stall and inflationary pressures could re­ emerge.Against this backdrop, investors further pared back expectations of near­ term easing, weighing on risk appetite. US technology stocks, led by semicon­ ductorcompanies,retreatedaftermonths of strong gains, while gold extended its decline towards USD 4,000 per ounce. Overall, recent developments show the global economy is stabilising, although the recovery remains vulnerable to geopoliticalrisksandpersistentinflation­ ary pressures. Kenny P ANJANADEN Partner, AWM & ESG Research Centre Osama A L S ABBAGH Senior Manager, AWM & ESG Research Centre PwC Luxembourg The monthly PwC barometer, in collaboration with AGEFI Luxembourg, is an economic confidence indicator that is intended to be a simple and pragmatic tool aimed at capturing the economic atmosphere of the Grand Duchy each month. The indicator is based on a number of sentiment indices published monthly by Eurostat and Sentix, which are based on surveys (businesses, consumers or investors/ analysts). The indicators used are: consumer confidence (EA for euro area and LUX for Luxembourg), industrial confidence (EAand LUX), construc­ tion confidence (EA and LUX), financial con­ fidence (EA), retail confidence (EA), services confidence (EA) and the Sentix Index (EA). The evolution of the barometer over the past four years is displayed on the graph below. © PwCMarket Research Centre, IHSMarkit, Sentix, STATEC The monthly PwC Barometer